City Council Waives Fees to Accelerate Construction of Granny Flats

PR – With the goal of increasing San Diego’s housing supply for low- and middle-income San Diegans, the City Council today adopted an additional strategy that supports Mayor Kevin L. Faulconer’s “Housing SD” plan and makes it easier and more affordable for homeowners to build secondary units on their property.

“One of the fastest and least expensive ways we can increase affordable housing in San Diego is to make it easier to build granny flats,” Mayor Faulconer said. “With these new incentives, we’re removing barriers to encourage the construction of new units that San Diegans can actually afford. This will be another tool we’ll use to tackle our housing needs.”

The City Council voted unanimously to waive Development Impact Fees, Facility Benefit Assessment Fees and General Plan Maintenance Fees for the construction of “companion units,” otherwise known as accessory dwelling units or granny flats. Mayor Faulconer also directed $100,000 to the Public Utilities Department to cover the cost of Water and Sewer Capacity Fees for the remainder of Fiscal Year 2018. The proposals were brought forward by Councilmember Scott Sherman and supported by Mayor Faulconer.

“Companion Units provide a great housing option in the City that we desperately need and today we have move one step closer to increasing the number of these units by reducing the burdensome fees,” said Councilmember Scott Sherman. “The three barriers to building Companion Units are regulatory ordinance barriers, excessive fees, and ease of permitting. The City has already tackled the ordinance, today has tackled fees, and the only task left for us is to make it easy for San Diego to build these units. In the near future I will be bringing forward a Companion Unit toolkit providing three different designs that will help homeowners easily navigate the development process to achieve our goal of 2,000 to 6,000 new units over the next ten years.”

More than 70 percent of San Diegans can’t afford to buy a home at the county’s median home cost of more than $550,000 – making San Diego one of the least affordable markets in the country. Granny flats have become an increasingly popular option for cities looking to spur the development of housing and provide a more diverse stock of affordable and low-cost units.

Last year, the City changed the municipal code to implement state mandates reducing requirements for parking and permits as well as further changes to help spur production. The City also created an easy-to-use manual to help homeowners decide whether to build a granny flat in their yard or above their garage, provide them with cost estimates and suggest how to find tenants.

“Reducing the regulatory fees for companion units is an important next step to encouraging the production Citywide,” said Councilmember Georgette Gomez, Chair of the Smart Growth and Land Use Committee. “I am pleased to see the Council take action on this important piece of the housing solution that will benefit residents across our City.”

A recent study found granny flat permits in San Diego increased by 71 percent between 2016 and 2017. While this increase is encouraging, regulatory costs remain a significant barrier to increasing production. Fees for new construction average between $30,000 and $49,000 for a single companion unit.

The City has taken a number of additional steps over the past year to spur construction of low-income and middle-class housing, speed up the development review process, direct funding toward affordable housing and encourage growth in transit-priority areas.

Since June 2017, the City has adopted strategies including:

Affordable Housing Density Bonus Program – Updated the program to incentivize developers to increase the production of smaller and more affordable units.

11th Code Update – Madecode changes to streamline the development process, remove unnecessary barriers to development and increase production.

Affordable/Sustainable Expedite Program – Revised the program to encourage development near transit and improve service delivery where qualifying projects can have their discretionary and ministerial permits expedited.

Companion (Second Dwelling) Unit Production – Changed the municipal code to implement state mandates reducing requirements for parking and permits as well as further changes to help promote the construction of Accessory Dwelling Units.

Streamlined Environmental Review – Developed a checklist and compliance document to simplify use and ensure consistency in application of the California Environmental Quality Act Guidelines section 15183, which allows a streamlined review process for public and private development projects that are consistent with the densities established by existing zoning, community plan or general plan policies for which an Environmental Impact Report was certified.

In addition to the fee waivers and alternative funding approved today, Mayor Faulconer plans to commit an additional $300,000 in the Fiscal Year 2019 budget to cover the cost for additional fee waivers designed to increase granny flat supply.